VAT Scheme CompareFarm 67
VAT Scheme Compare · HMRC guidance reviewed 6 August 2026

Limited cost business test: 2% and £1,000 rules

Test relevant goods against both HMRC limits for each VAT return period instead of self-classifying once.

Decision boundary

The 16.5% rate applies when relevant goods fall below the period tests. The £1,000 annual amount is proportioned for shorter periods and only qualifying goods count.

Evidence to check

Compare this VAT period

Official source

HMRC VAT Notice 733: limited cost businesses

General information only. HMRC decides scheme eligibility, rate and leaving dates.

Related guides

VAT Flat Rate calculator: use VAT-inclusive turnoverApply the selected HMRC rate to VAT-inclusive turnover and keep standard-accounting inputs separate.Flat Rate vs standard VAT: compare the same periodCompare cash paid to HMRC without treating the lower estimate as proof that a scheme is suitable or available.First-year VAT discount: the 1 percentage-point windowApply the discount only during the first year after VAT registration and to the rate otherwise applicable.

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